Rohitashva Singhvi

Author: Rohitashva Singhvi

How to create google classroom
This blog is mainly for the teachers who want to build a paperless classroom. Can this be done? Yes! It requires huge investment. No… zero investment. Yes, you heard it right, it’s free. Without wasting time, let’s begin. The solution is Google Classroom. Today, we will learn how to create a Google Classroom.

Steps for creating a Google Classroom:

1. Go to Gmail

2. Nine dots, click on classroom

3. Click plus sign: Two options
1. Create class
2. Join class
Click on create class

4. Accept the disclaimer

5. Fill in the details and click on create

6. Congrats, your class created

Hope you benefited from this blog. Stay tuned for further updates.

Pics Credit: Google & Created By Kamaishi Singhvi

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February 22, 2022
Switch Bill of Lading and their types – Supply Chain Management
A complete manual and word of advice as per below details to understand switch bill of lading and their types:

What it means? A switch Bill of Lading refers to a second set of Bill of Lading issued by the carrier (or its agent) to substitute the original bills of lading issued at the time of shipment.Even though it technically deals with the same cargo, the information on the switch B/Ls, for various reasons put forth below, is intentionally edited and is not meant to be identical to the original B/L it replaces. Just like the original, the switch B/L serves as:
- A receipt for goods (for the destination agent)
- Evidence of contract of carriage (contract between shipper and the carrier)
- Document of title to the goods (consignee will need at least one original to receive the goods)
In most cases, a switch B/L is used in order to edit the shipper information, i.e. replacing the actual factory details with the trading agent’s. That said, there may be various other motives for requesting a switch B/L. Let’s go deeper in Switch Bill of Lading and their types – Supply Chain Management:

Reasons to issue a switch Bill of Lading

Switch B/Ls are only issued against the surrender of the original set and may be required by any of the three parties with direct involvement in the purchase/sale of the cargo: the cargo owner/seller (or an authorized representative), the trading agent, and the end buyer.The reasons for requiring a switch B/L include:
- The seller (who could be a trading agent) wants to hide the name of the actual exporter from the consignee to prevent the consignee from striking a deal with the exporter directly.
- The seller does not want the buyer to know the actual country of origin of the cargo.
- The original B/L may be held up in the country of shipment, or the ship may arrive at the discharge port prior to the original B/Ls.
- The trading agent prefers to ease his cash flow by first receiving payment from the end receiver before paying the shipper.
- Goods may have been resold en route as a high sea sale and the discharge port must now be changed to another port.
- Customs at destination or consignee request for the cargo description to be edited. Eg. “tools” instead of “gardening tools”.
- The goods were originally shipped in small parcels on separate B/Ls and the buyer prefers to have only one B/L covering all the parcels to facilitate his on-sale. Or vice versa – one B/L was issued for a bulk shipment which the buyer prefers to split into multiple B/Ls covering smaller parcels.
Switch Bill of Lading procedure

The Switch B/L can only be officially requested by the cargo owner or principal. In other words, since the Bill of Lading represents ownership, only the company holding the full set of documents can request for a switch B/L.Advice: the request should only be made if the company has all three original B/Ls in hand, except in the case of a Telex Release.After the request has been made, the switch bill must be approved by the carrier and the freight forwarder, who needs to very meticulously compare the differences between the original B/L and the new and proposed Switch B/L to make sure everything that needs to match, matches.Note: only the carrier or freight forwarder is allowed to sign a Bill of Lading.Once the switch B/L has been approved for issuance, the carrier and/or freight forwarder must make sure that the original set of B/Ls is taken out of circulation and cancelled before the switch B/L can be released. This is important as it ensures that there is only one set of documents in force to prevent problems.

Switch Bill of Lading example

When requesting for a switch B/L standard procedure must always be followed to ensure a smooth process. Here’s an example of how a switch B/L may be requested and processed.Consider these three parties:
- Party A: factory producing the goods
- Party B: trading agent selling the goods
- Party C: final buyer/consignee
The first and original set of B/L will have been issued with A as the shipper and B as the consignee. The cargo owner may later request for a switch B/L listing B as the shipper and C as the consignee.Other changes to the shipment description may be made, but only under the cargo owner’s written authority and only to certain information such as to the condition of the cargo, payment terms, place and date of loading, Incoterms, etc.Any inconsistencies on the switch bill will result in the carrier and his agent (if the agent has issued the switch bills) facing risks of claims from parties who have suffered a loss as a result of these misrepresentations.Switch bills of Lading do not contain any information that indicates that they are not the initial and original B/Ls. However, the consignee or end buyer is at liberty to ask the shipping line whether the bills were switched. Shipping lines are not legally obliged to divulge this information. But it’s common practice for them to do so without disclosing any further details.

Changes must be reflected across other documents

When a switch bill is issued, a new invoice and packing list must also be issued to reflect the new changes accordingly and accurately.As per our example, this means showing company B as the supplier and company C as the buyer/consignee. This not only avoids exposing the supplier’s identity but also maintains consistency with the new set of Bill of Lading.

Possible risks for a shipping agent or freight forwarder

In recent years, there’ve been multiple cases of fraud under switch bills, which have caught the attention of shipping lines. This highlights increased risks for cargo agents such as:
- A letter of indemnity (written authorization) issued by the requestor could potentially be legally unenforceable.
- Differences in the description of the cargo may cause conflict as to the validity of the Bills of Lading as receipts of the cargo shipped
- One set of Bill of Ladings might incorporate a different voyage charter with a different jurisdiction clause.
- The original set of Bill of Ladings may have been marked freight payable only for the switch bills to be marked as freight prepaid, thereby affecting owners’ right to lien.
- Inaccurate statements such as the shipment date, shipper or consignee name, quantity/condition of cargo, etc constitute misrepresentations.
- Sometimes a different charter party with different freight/demurrage rates is incorporated, which defrauds the receiver.
- Switch Bills of Lading may be used to draw fraudulently on a letter of credit or to defraud a seller/buyer.
- In the event several versions of the Bills of Lading are circulating at the same time, the carrier risks delivery to the wrong party and then having to compensate the holders of the true ‘original’ bills.
For further reference, there are various case studies available online showing how different courts arrive at different verdicts based on the misinterpretations and misuse of the Switch Bill of Lading.

Tips on how to deal with a switch Bill of Lading
1. Freight forwarders should verify the reliability of the principal party authorizing the issuance of the second set. Obtain their authority in writing and a signed letter of indemnity (and countersigned by a bank if deemed necessary by the agent) indemnifying the cargo agent for all consequences of issuing the second set of Bills of Lading.
2. Freight forwarders should also consider whether it is also necessary to obtain written authority from the other parties who may be affected by his action (eg. the ship owner or the shipper or a bank). If a freight forwarder is authorized by a charterer to issue a switch Bill of Lading on behalf of the carrier, written authority by the ship owner must be obtained. Failure to do so will result in the ship owner having a valid claim against the agent for losses resulting from the issuance of the second set without authority.
3. If the agent has been asked by the principal party to issue the switch bill based on an indemnity from the customer, the agent should get the proper wording from the principal and get the completed indemnity approved by the principal party before issuing it.
4. It is also advisable to ensure that the cargo agent is covered by their own insurance for the issuance of switch bills. They should provide their insurance company with the exact reason for the issuance of the switch bill of lading.
Must Read: Letter of Credit Documentation: Key Points Terms and Bank Roles (rohitashvasinghvi.com)

Source: icontainers.com

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February 9, 2022
Simple Steps to learn Accounting for Balance Sheet Preparation
Learn how simple Balance Sheet Preparation is, you will easily understand logic behind this with this Image presentation posted below:

The Accounting Equation is a fundamental concept in accounting that represents the relationship between a company’s assets, liabilities, and equity. The equation is as follows:

Assets = Liabilities + Equity

The accounting equation must always be in balance, which means that the total assets of a company must equal the sum of its liabilities and equity. Every financial transaction affects the accounting equation, and it is important for accountants to understand how transactions affect each of the three components of the equation.

Let’s look at a few examples of transactions and how they affect the accounting equation:
1. A company receives $10,000 cash from a customer for services rendered. This transaction increases the company’s cash account (an asset) by $10,000. Since there is no corresponding increase in liabilities or equity, the accounting equation becomes:
Assets = Liabilities + Equity $10,000 = 0 + $10,000
1. The company purchases $5,000 worth of supplies on credit. This transaction increases the company’s supplies account (an asset) by $5,000, but it also increases the company’s accounts payable account (a liability) by $5,000 since the company has not yet paid for the supplies. The accounting equation becomes:
Assets = Liabilities + Equity $15,000 = $5,000 + $10,000
1. The company pays $1,000 in cash for rent. This transaction decreases the company’s cash account (an asset) by $1,000, but it also decreases the company’s retained earnings (a component of equity) by $1,000 since the company’s net income is reduced by the rent expense. The accounting equation becomes:
Assets = Liabilities + Equity $14,000 = $5,000 + $9,000

In summary, every transaction in accounting affects the accounting equation by changing the values of assets, liabilities, and equity. It is essential for accountants to keep track of these changes to ensure that the accounting equation remains in balance.

Transaction Image to learn Accounting Transaction in more detail: Image for educational purpose only just used for Balance Sheet preparation

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February 5, 2022
Introduction – The Accounting Equation
From the large, multi-national corporation down to the corner beauty salon, every business transaction will have an effect on a company’s financial position. The financial position of a company is measured by the following items:
1. Assets (what it owns)
2. Liabilities (what it owes to others)
3. Owner’s Equity (the difference between assets and liabilities)
The accounting equation (or basic accounting equation) offers us a simple way to understand how these three amounts relate to each other. The accounting equation for a sole proprietorship is:

The accounting equation for a corporation is:

Assets are a company’s resources—things the company owns. Examples of assets include cash, accounts receivable, inventory, prepaid insurance, investments, land, buildings, equipment, and goodwill. From the accounting equation, we see that the amount of assets must equal the combined amount of liabilities plus owner’s (or stockholders’) equity.Liabilities are a company’s obligations—amounts the company owes. Examples of liabilities include notes or loans payable, accounts payable, salaries and wages payable, interest payable, and income taxes payable (if the company is a regular corporation). Liabilities can be viewed in two ways:(1) as claims by creditors against the company’s assets, and
(2) a source—along with owner or stockholder equity—of the company’s assets.Owner’s equity or stockholders’ equity is the amount left over after liabilities are deducted from assets:Assets – Liabilities = Owner’s (or Stockholders’) Equity.Owner’s or stockholders’ equity also reports the amounts invested into the company by the owners plus the cumulative net income of the company that has not been withdrawn or distributed to the owners.If a company keeps accurate records, the accounting equation will always be “in balance,” meaning the left side should always equal the right side. The balance is maintained because every business transaction affects at least two of a company’s accounts. For example, when a company borrows money from a bank, the company’s assets will increase and its liabilities will increase by the same amount. When a company purchases inventory for cash, one asset will increase and one asset will decrease. Because there are two or more accounts affected by every transaction, the accounting system is referred to as double-entry accounting.A company keeps track of all of its transactions by recording them in accounts in the company’s general ledger.Each account in the general ledger is designated as to its type: asset, liability, owner’s equity, revenue, expense, gain, or loss account.We created a visual tutorial to demonstrate how a variety of transactions will affect the accounting equation and the financial statements. It is available in AccountingCoach PRO along with test questions that pertain to the accounting equation.

Balance Sheet and Income Statement

The balance sheet is also known as the statement of financial position and it reflects the accounting equation. The balance sheet reports a company’s assets, liabilities, and owner’s (or stockholders’) equity at a specific point in time. Like the accounting equation, it shows that a company’s total amount of assets equals the total amount of liabilities plus owner’s (or stockholders’) equity.The income statement is the financial statement that reports a company’s revenues and expenses and the resulting net income. While the balance sheet is concerned with one point in time, the income statement covers a time interval or period of time. The income statement will explain part of the change in the owner’s or stockholders’ equity during the time interval between two balance sheets.

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February 5, 2022
IFRS Standard & Interpretation Updates
Financial statement considerations in adopting new and revised pronouncements

Where new and revised pronouncements are applied for the first time, there can be consequential impacts on annual financial statements, including:
- Updates to accounting policies. The terminology and substance of disclosed accounting policies may need to be updated to reflect new recognition, measurement and other requirements, e.g. IAS 19 Employee Benefits may impact the measurement of certain employee benefits.
- Impact of transitional provisions. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors contains a general requirement that changes in accounting policies are retrospectively applied, but this does not apply to the extent an individual pronouncement has specific transitional provisions.
- Disclosures about changes in accounting policies. Where an entity changes its accounting policy as a result of the initial application of an IFRS and it has an effect on the current period or any prior period, IAS 8 requires the disclosure of a number of matters, e.g. the title of the IFRS, the nature of the change in accounting policy, a description of the transitional provisions, and the amount of the adjustment for each financial statement line item affected
- Third statement of financial position. IAS 1 Presentation of Financial Statements requires the presentation of a third statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements in a number of situations, including if an entity applies an accounting policy retrospectively and the retrospective application has a material effect on the information in the statement of financial position at the beginning of the preceding period
- Earnings per share (EPS). Where applicable to the entity, IAS 33 Earnings Per Share requires basic and diluted EPS to be adjusted for the impacts of adjustments result from changes in accounting policies accounted for retrospectively and IAS 8requires the disclosure of the amount of any such adjustments.
Whilst disclosures associated with changes in accounting policies resulting from the initial application of new and revised pronouncements are less in interim financial reports under IAS 34 Interim Financial Reporting, some disclosures are required, e.g. description of the nature and effect of any change in accounting policies and methods of computation.

IFRS9 Financial Instruments (2014) {Effective for annual periods beginning on or after 1 January 2018}

A finalised version of IFRS 9 which contains accounting requirements for financial instruments, replacing IAS39 Financial Instruments: Recognition and Measurement. The standard contains requirements in the following areas:

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For more information, read our previous post: Brief Overview of IFRS & How it’s different from US GAAP – Singhvi Online

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February 4, 2022
Brief Overview of IFRS & How it’s different from US GAAP
“What’s the fuss over IFRS?”

Providing a brief overview of the transition to adoption of IFRS and convergence with US GAAP. While we realize that IFRS will become a future reality, the question lingered regarding the differences between the two accounting standards. I thought it would be useful to assess the areas of major differences. In this short blog post, it will not be impossible to address all the components of IFRS but we’ll try and capture primary differences.

IFRS standards are broader and more principles-based than U.S. GAAP. This represents a hurdle for many U.S. CPA’s because we have been used to narrow “bright line” rules and guidelines on how to apply GAAP. IFRS tends to leave implementation of the principles up to preparation of financial statements and auditors. The regulatory and legal environment in the United States has been primarily responsible for narrower prescriptive interpretation of accounting rules. Adoption of IFRS will require a paradigm shift by accountants in the United States.

Financial statement presentation represents an area where differences exist. For example International Accounting Standards does not provide a standard layout as prescribed by the SEC. One of the big differences is that IFRS requires debt associated with a covenant violation to be presented as a current liability unless there a lender agreement was reached prior to the balance sheet date. US GAAP allows the debt to be presented as non-current if an agreement was reached prior to issuing the financial statements. Another difference in financial statement presentation deals with income statement classification of expenses. The SEC requires presentation of expenses based on function whereas IFRS allows expenses to be presented by either function or nature of expenses. Additional differences exist with presentation of significant items. Variations emerge with disclosure of performance measures such as operating profit. IFRS does not define such items so there can be significant diversity in the items, headlines, and subtotals of the income statement between US GAAP and IFRS.

A big area of divergence is with negative goodwill and research and development. IFRS requires that a reassessment of purchase price allocation be recognized as income while US GAAP allows negative goodwill to be allocated on a pro rata basis and can recognize the excess of the carrying amount of certain assets as an extraordinary gain. US GAAP requires research and development to be expensed immediately in contrast to IFRS which allows it to be capitalized as a finite-lived intangible asset. IFRS allows revaluation to the fair value of intangible assets other than goodwill whereas US GAAP does not permit revaluation.

There are both similarities and differences in the treatment of inventory. US GAAP allows LIFO as an acceptable costing method in contrast to IFRS which prohibits the use of LIFO. There are also some differences in measurement of inventory value. US GAAP states that inventory should be carried at the lower of cost or market. Market is defined as current replacement cost as long as market does not exceed net realizable value. IFRS allows inventory to be carried at the lower of cost or net realizable value which is the best estimate of the amounts which inventories are expected to realize and may or may not be equal to fair value.

While there are differences, the two standards boards are working to bring the two standards closer together. This should make the shift to IFRS easier when it comes time to change. One of the most significant areas where differences are being converged is revenue recognition. Currently US GAAP is more prescriptive than IFRS, especially for application to specific industry situations such as the sale of software and real estate. It will take time and effort to bring the two standards on to the same page. I looked at the two standards with the objective of understanding the key differences. The journey to convergence and adoption of IFRS will be interesting, challenging, and educational to say the least.

The IFRS: History and Purpose

The IFRS is designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade. The IFRS is particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards.

The IFRS began as an attempt to harmonize accounting across the European Union, but the value of harmonization quickly made the concept attractive around the world. They are occasionally called by the original name of International Accounting Standards (IAS). The IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On April 1, 2001, the new IASB took over the responsibility for setting International Accounting Standards from the IASC. During its first meeting the new Board adopted existing IAS and Standing Interpretations Committee standards (SICs). The IASB has continued to develop standards calling the new standards the IFRS.

Framework

The Conceptual Framework for Financial Reporting states the basic principles for IFRS. The IASB and FASB frameworks are in the process of being updated and converged. The Joint Conceptual Framework project intends to update and refine the existing concepts to reflect the changes in markets and business practices. The project also intends consider the changes in the economic environment that have occurred in the two or more decades since the concepts were first developed.

IFRS Defined Objective of Financial Statements

A financial statement should reflect true and fair view of the business affairs of the organization. As these statements are used by various constituents of the society/regulators, they need to reflect an accurate view of the financial position of the organization. It is very helpful to check the financial position of the business for a specific period.

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Learn more about US GAAP Click Here: Generally Accepted Accounting Principles – Rohitashva Singhvi

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February 4, 2022
UAE VAT Important FAQ
What is VAT?

VAT is a transaction-based indirect tax, which is charged and collected at each stage
of the supply chain by legal and natural persons (“persons”) which meet the
requirements to be registered for VAT.
Thus, persons which are either registered or are required to register for VAT (known
as “taxable persons”) charge VAT to their customers on taxable supplies of goods or
services. A taxable supply is defined in the VAT legislation as a “supply of goods or
services for a consideration by a person conducting business in the UAE, and does not
include an exempt supply”. As a consequence, for a supply to be a taxable supply,
the following conditions must be met:
• there needs to be a supply of goods or services;
• the supply has to be for consideration;
• the supply has to be made by a person who is conducting business in the UAE;
and
• the supply should not be an exempt supply.
Taxable supplies may either be subject to the standard rate of 5% or zero rate
(i.e. 0%). A supply cannot be a taxable supply if it is an exempt supply. Where a supply
is neither a taxable supply nor an exempt supply, it will be outside the scope of UAE
VAT. VAT which taxable persons charge to their customers is known as “output tax”. On a
periodic basis, taxable persons are required to account for output tax to the FTA. This
is done by submitting a periodic tax return (also known as a “VAT return”).
It should be noted that taxable persons will typically be charged VAT (known as “input
tax”) by their suppliers when they acquire goods and services. Taxable persons are
generally able to recover input tax, subject to certain conditions. Where the conditions
allowing recovery of input tax are met, taxable persons are able to deduct this input
tax from the value of output tax declared in the same VAT return.
The difference between the output tax and input tax reported by a taxable person in
their VAT returns is either the net VAT payable to the FTA (if the output tax exceeds
the input tax) or net VAT recoverable from the FTA (if the input tax exceeds the output
tax) for that specific tax return period.

What are VAT registration requirements?
VAT registration process as per below details:

As mentioned above, a person is only required to account for VAT in the UAE, if it is
a taxable person – that is, if the person is either registered for VAT or is obligated to
register for VAT. It is, therefore, necessary to determine when a person is required to
be registered for VAT.
VAT registration may be either mandatory or voluntary. It should be noted that
different registration requirements and conditions may apply to both mandatory and
voluntary registrations depending on whether a person has a place of residence in the
UAE. As a consequence, it is important for a person to know whether or not it is
resident in the UAE when considering which registration rules apply to it.
A person would have a place of residence in the UAE for the purposes of VAT
registration if the person has a place of establishment or fixed establishment in the
UAE. The terms are defined in the Decree-Law:4
• “Place of Establishment” is the place where a business is legally established in
a country pursuant to the decision of its establishment, in which significant
management decisions are taken or central management functions are
conducted.
• “Fixed Establishment” is any fixed place of business, other than the Place of
Establishment, in which the person conducts his business regularly or
permanently and where sufficient human and technology resources exist to
enable the person to supply or acquire goods or services, including the person’s
branches.

What are mandatory points for registration?
A person resident in the UAE is required to register for VAT if any of the following
apply:5
• the total value of their taxable supplies made within the UAE and imports into
the UAE exceeded AED 375,000 over the previous 12-month period; or
• the person anticipates that the total value of their taxable supplies made within
the UAE and imports into the UAE will exceed AED 375,000 in the next 30 days.
Supplies of goods or services made in the UAE in the course of business.
• Any goods or services that the person has imported into the UAE that would
have been subject to VAT had they been supplied in the UAE.
The person should not include in this calculation the value of any supplies which are
either exempt from VAT or are outside the scope of UAE VAT.

What does a business need to do to prepare for VAT?
Businesses will need to meet certain requirements to fulfil their tax obligations. To fully comply with VAT, businesses will need to consider the VAT impact on their core operations, financial management and book-keeping, technology, and perhaps even their human resource mix (e.g., accountants and tax advisors). It is essential that businesses try to understand the implications of VAT and make every effort to align their business model to government reporting and compliance requirements.

How will real estate be treated?

The VAT treatment of real estate will depend on whether it is a commercial or residential property.

Supplies (including sales or leases) of commercial properties will be taxable at the standard VAT rate (i.e 5%).

On the other hand, supplies of residential properties will generally be exempt from VAT. This will ensure that VAT would not constitute an irrecoverable cost to persons who buy their own properties. In order to ensure that real estate developers can recover VAT on construction of residential properties, the first supply of residential properties (through sale or lease) within 3 years from their completion will be zero-rated.

Will there be VAT grouping?
Businesses that satisfy certain requirements covered under the Legislation (such as being resident in the UAE and being related/associated parties) will be able to register as a VAT group. VAT grouping would generally simplify accounting for VAT.

How will insurance be treated?
Generally, insurance (vehicle, medical, etc) is taxable. Life insurance, however, is an exempt service.

How will financial services be treated?
Fee based financial services are subject to VAT while margin based products are exempt.

How will Islamic finance be treated?

Islamic finance products are consistent with the principles of sharia and therefore often operate differently from financial products that are common internationally.

To ensure that there are no inconsistencies between the VAT treatment of standard financial services and Islamic finance products, the treatment of Islamic finance products is aligned with the treatment of similar standard financial services.

How quickly will refunds be released?
Refunds will be made after the receipt of the application and subject to verification checks, with a particular focus on avoiding fraud.

Will VAT be paid on imports?

VAT is due on the goods and services purchased from abroad.

In case the recipient in the State is a registered person with the Federal Tax Authority for VAT purposes, VAT would be due on that import using a reverse charge mechanism.

In case the recipient in the State is a non-registered person for VAT purposes, VAT would need to be paid before the goods are released to the person.

Will the goods exempt from customs duties also be exempt from VAT?
No. Imported goods may be exempt from customs duties but still be subject to VAT.

Will there be a profit margin scheme?
To avoid double taxation where second hand goods are acquired by a registered person from an unregistered person for the purpose of resale, the VAT-registered person will be able to account for VAT on sales of second hand goods with reference to the difference between the purchase price of the goods and the sale price of the goods (that is, the profit margin). The VAT which must be accounted for by the registered person will be included in the profit margin. Further details of the conditions to be met in order to apply this mechanism can be found in the Executive Regulations of the Federal Decree-Law No.(8) of 2017 on Value Added Tax.

What sectors will be zero rated?

VAT will be charged at 0% in respect of the following main categories of supplies:

Exports of goods and services to outside the GCC;
International transportation, and related supplies;
Supplies of certain sea, air and land means of transport (such as aircraft and ships);
Certain investment grade precious metals (e.g. gold, silver, of 99% purity);
Newly constructed residential properties, that are supplied for the first time within 3 years of their construction;
Supply of certain education services, and supply of relevant goods and services;
Supply of certain healthcare services, and supply of relevant goods and services.

What are the categories of exempt supplies?

The following categories of supplies will be exempt from VAT:

The supply of some financial services;
Residential properties (excluding the first supply of newly constructed residential property which qualifies for the zero-rating treatment);
Bare land; and
Local passenger transport.

If you need to know more info then please refer FTA website.

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February 3, 2022
How to file UAE value added tax (‘VAT’) returns?
For submitting vat returns please read instructions below to simplify your work flow:

This user instructions guide will help you understand the key steps to file a VAT Return online through the eServices portal. For each Tax Period, a Taxable Person will be required to submit a VAT
Return which contains details regarding the supplies made or received by the Taxable Person.

Main Points to be noted while return preparation:
1. The standard Tax Period shall be a period of three calendar months ending on the
  date that the FTA determines.
2. The FTA may, at its discretion, assign a different Tax Period other than the standard one, to a certain group of Taxable Persons.
3. A Tax Return must be received by the FTA no later than the 28th day following the
  end of the Tax Period concerned or by such other date as directed by the FTA. Where
  a payment is due to the FTA, it must be received by the FTA by the same deadline.
Filing VAT Returns:

For each Tax Period, the Taxable Person shall report details in relation to sales and
other outputs as well as purchases and other inputs. For details please refer to the VAT
Returns full user guide. (You need to fill the details in prescribed format provided by FTA)

Steps to complete the process of submitting a VAT Return Form
> First step
Login to the FTA eServices portal and go to the ‘VAT’ tab whereby you will be able
to access your VAT Returns. From this screen you should click on the option to open
your VAT Return.
> Second step
Complete the Form: Fill in the following details: (These points are included in second step)
1. The sales and all other outputs as well as on expenses and all other inputs as
follows:
# the net amounts excluding VAT; and
#the VAT amount;

2. Based on your Payable Tax for the Tax Period proceed to a payment of any
payable tax to the FTA or request (if you wish) a VAT refund; and

3. Provide the additional reporting requirements in relation to the use of the Profit
Margin Scheme during the relevant Tax Period.

>Third Step
Submit the Form: Ensure all the details must be verified as per FTA Guidelines.
carefully review all of the information entered on the form after completing all mandatory
fields and confirming the declaration. Once you confirm that all of the information included
in the VAT Return is correct, click on the Submit button.

>Fourth Step
Pay the VAT Tax due (if applicable) through “My Payments” tab. Ensure payment
deadlines are met.

Here you go your, Your returns Filed.

If you have any doubt then refer FTA website for more details.

Hope this will help you to understand VAT submission in simple steps.

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February 3, 2022
What is Tax Group (VAT) & What are Implications – All Basic Info
Tax grouping for VAT purposes is an administrative easement available to businesses
and a revenue protection measure for government:
 Creating a tax group has the effect of registering a single taxable person.
 A tax group is issued one VAT Tax Registration Number (TRN) for use by all
group members, and only one tax return is required for all group members.
 Transactions taking place within a tax group are generally disregarded for VAT
purposes, meaning that cash-flow or absolute VAT costs that might otherwise
be suffered by the businesses concerned are eliminated. Moreover, revenue
risks that might otherwise arise on significant intra-group transactions are also
eliminated.
Strict qualifying criteria must be applied to limit the use of the measure to those for
which it is designed i.e. it is an administrative simplification measure, not one designed
to enable tax avoidance at any level.
Purpose of this document
This document contains more detailed guidance for businesses interested in forming
a tax group, adding members to or removing members from an existing tax group, and
disbanding a tax group.

Who should read this ?
This document should be read by all persons seeking to understand whether or not
they are eligible to form a tax group, how to amend a tax group, and how to disband a
tax group. It should also be read by those who are part of a tax group so as to
understand their associated obligations.

Implications of grouping for VAT purposes

The effect of a tax group registration is that the members of the tax group are treated
as a single taxable person for VAT purposes. This means that:
 Supplies made between members of the tax group will be disregarded for VAT
purposes and therefore no VAT is chargeable on intra-group transactions;
 Only one VAT Tax Registration Number is issued for use by the group;
 The tax group submits only one tax return which summarises all supplies and
purchases made by group members over the VAT period concerned; and
 One member of the tax group will be appointed as its ‘representative member’.
All of the VAT obligations of the tax group, and all supplies made and received
by it, are deemed to be carried out in the name of the representative member.

Important note to be considered: the members of a tax group are jointly and severally liable
for any and all VAT debts and other such obligations of the group for the period during which
they were members. That means that even when a business has left a tax group, it remains
liable for the period of membership.

Eligibility to form a tax group
Subject to certain criteria being fulfilled, two or more legal persons may apply to form
a tax group. Details of each of the criteria that must be fulfilled by each of the members
of a tax group are set out below.
Business criteria
Each member must be carrying on a business. Broadly, a business is defined as any
activity carried on in any place (i.e. in the UAE or elsewhere) regularly (i.e. the activity
is not a one-off event) and independently (i.e. by a business, not its employees).
Generally, this means that a person that is not in business cannot form or join a tax
group.
Legal person criteria
Each member of a tax group must be a legal person (i.e. they must be a company,
government entity, or similar).
A legal person is an entity that has legal personality formed under the relevant laws
that is capable of entering into contracts in its own name. Typically, for example, a
company would be a legal person, as it is formed under companies law and can enter
into contracts. However, it is also possible for other entities to be created which are
similar (e.g. the companies formed by Decree under local laws in the Emirates).
A natural person (i.e. an individual) cannot create or join a tax group.

Establishment criteria
Each member must be resident in the UAE, either by way of having its primary
business establishment or as a consequence of having a fixed establishment in the
country. A business establishment is usually the place where key management
decisions affecting a business are made. A fixed establishment is a place which
possesses the necessary human and technical resources sufficient to carry on a
business.
A foreign-owned subsidiary that has been established in the UAE can, under these
criteria, qualify to be included in a tax group. A branch of a foreign-owned company
can also qualify under the fixed establishment test.
Related parties (and control) criteria
Each member must be related to the other to a sufficient extent. In this context,
“related” is taken to mean they share economic, financial and organisational ties
(either in law, shareholding or voting rights). One person must be able to control the
members.

Economic ties are indicated where, for example, there is a common interest in the
proceeds of the business. Financial ties are indicated where, for example, one part of
the business benefits the other. Organisational ties are indicated where, for example,
you share common premises.

Noticeable Point: common sponsorship of two or more Legal Persons will, generally, give
rise to the possibility of tax grouping but only where the control criteria can also be met
in actuality. Where the sponsorship agreement is overridden by another agreement whereby
the control criteria cannot, in actuality, be satisfied, tax grouping will not be possible.

Government Entities
Additional criteria for Government Entities
There are certain additional criteria which apply to Government Entities in respect of
forming a tax group:
 Designated Government Bodies may only form or join a tax group with other
Designated Government Bodies;
 Designated Government Bodies may not form or join a tax group with other
Government Bodies (i.e. those Government Bodies which are not Designated);
and
 Government Bodies that are not Designated and are registerable in their own
right can form or join a tax group with other legal entities, subject to the usual
tax grouping rules.
Forming and amending a tax group
Forming a tax group
Once it has been determined that the prospective members are eligible to form or join
a tax group, it is also necessary to establish whether that group is required to or eligible
to register for VAT purposes. The VAT registration requirements can be satisfied
where either –
 one prospective member alone satisfies the relevant registration requirements;
or
 if taken together, the total value of supplies made by or expenses (which are
subject to VAT), incurred by the prospective members satisfy the relevant
registration requirements.
The flowchart in Appendix A will assist to determine whether the tax group eligibility
and registration tests have been met and an application can be submitted.
An application to form a tax group will, subject to the necessary checks being
satisfied, be treated as effective on either –
 the first day of the tax period following the tax period in which the application is
received; or
 any other date as determined by the Federal Tax Authority (FTA).
Applying to form a tax group
As part of the registration process it will be necessary for you to decide who you wish
to appoint as the representative member of the tax group. The representative member
can be any one of the members of the proposed group. The tax returns of the group
are submitted in the name of the representative member.
Important: notwithstanding the appointment of a representative member, the
members of a tax group are jointly and severally liable for all taxes and penalties due
from the representative member.

CREDIT: FTA WEBSITE

Citations: FTA Website.

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February 3, 2022
Financial Accounting – Concepts
Accounting Concepts :: Assumptions & Practices
1. Business Entity Concept :
  In accounting, a business or an organization and its owners are treated as two separately identifiable parties. This is called the entity concept. The business stands apart from other organizations as a separate economic unit.
2. Going Concern Concept :
  A going concern is a business that is assumed will meet its financial obligations when they fall due. It functions without the threat of liquidation for the foreseeable future, which is usually regarded as at least the next 12 months or the specified accounting period (the longer of the two). The presumption of going concern for the business implies the basic declaration of intention to keep operating its activities at least for the next year, which is a basic assumption for preparing financial statements that comprehend the conceptual framework of the IFRS. Hence, a declaration of going concern means that the business has neither the intention nor the need to liquidate or to materially curtail the scale of its operations.
3. Accounting Period Concept :
  An accounting period, in bookkeeping, is the period with reference to which management accounts and financial statements are prepared. In management accounting the accounting period varies widely and is determined by management. Monthly accounting periods are common.
4. Matching Concept :
  In accrual accounting, the matching principle instructs that an expense should be reported in the same period in which the corresponding revenue is earned, and is associated with accrual accounting and the revenue recognition principle states that revenues should be recorded during the period in which they are earned, regardless of when the transfer of cash occurs. By recognizing costs in the period they are incurred, a business can see how much money was spent to generate revenue, reducing “noise” from timing mismatch between when costs are incurred and when revenue is realized. Conversely, cash basis accounting calls for the recognition of an expense when the cash is paid, regardless of when the expense was actually incurred.
5. Cost Concept :
  In accounting, the cost principle is part of the generally accepted accounting principles. Assets should always be recorded at their cost, when the asset is new and also for the life of the asset.
6. Money Measurement Concept :
  The money measurement concept underlines the fact that in accounting and economics generally, every recorded event or transaction is measured in terms of money, the local currency monetary unit of measure.
7. Dual Aspect Concept :
  Each transactions has two aspects > Receiving the Benefit or Giving the Benefit
  The dual aspect concept states that every business transaction requires recordation in two different accounts.
  Assets = Liabilities + Equity
8. Revenue Recognition (realization) concept :
  The revenue recognition principle is a cornerstone of accrual accounting together with the matching principle. They both determine the accounting period in which revenues and expenses are recognized. (Ex. Services Rendered / Goods Delivered)
9. Accrual Concept
  Accrual of something is, in finance, the adding together of interest or different investments over a period of time. It holds specific meanings in accounting, where it can refer to accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. (Ex. Events are recorded as they occur regardless when cash is paid/received)
10. Materiality
  Materiality is a concept or convention within auditing and accounting relating to the importance/significance of an amount, transaction, or discrepancy.
11. Consistency
  The concept of consistency means that accounting methods once adopted must be applied consistently in future. That means accounting practices and policies are consistent from one period to the other.
12. Conservatism
  In accounting, the convention of conservatism, also known as the doctrine of prudence, is a policy of anticipating possible future losses but not future gains. This policy tends to understate rather than overstate net assets and net income, and therefore lead companies to “play safe”. When given a choice between several outcomes where the probabilities of occurrence are equally likely, you should recognize that transaction resulting in the lower amount of profit, or at least the deferral of a profit.
13. Full Disclosure
  The full disclosure requires that all material facts must be disclosed in the financial statements. For example, in the case of sundry debtors, not only the total amount of sundry debtors should be disclosed, but also the amount of good and secured debtors, the amount of good but unsecured debtors and amount of doubtful debts should be stated. This does not mean disclosure of each and every item of information. It only means disclosure of such information which is of significance to owners, investors and creditors.
Stay tuned for next blog, Be Well
February 3, 2022